New Delhi: Despite offering free UPI transactions, fintech giants PhonePe and Google Pay earned over ₹5,065 crore last year, leveraging innovative revenue streams like voice-enabled speakers, advertising, and value-added services.
India’s Unified Payments Interface (UPI) processed a record 18.67 billion transactions worth ₹25.14 lakh crore in May 2025, with PhonePe and Google Pay commanding 46.47% and 36.09% of transaction volume, respectively, according to National Payments Corporation of India (NPCI) data. While users pay no fees for peer-to-peer (P2P) or peer-to-merchant (P2M) transactions, these platforms have built robust business models beyond transaction fees.
A major revenue source is voice-enabled speakers, commonly heard at shops announcing, “₹100 received via PhonePe.” These devices, rented to merchants for approximately ₹100 monthly, generate significant income. With over three million stores using this service, platforms like PhonePe earn nearly ₹30 crore monthly, totalling ₹360 crore annually, according to industry estimates. “These speakers enhance trust and brand visibility,” said Mrinal Jhaveri, founding partner at Ice VC, in a LinkedIn post, highlighting their role in merchant engagement.
Scratch cards, offering cashback or discounts, are another lucrative avenue. Brands pay PhonePe and Google Pay to feature promotions on these cards, reaching millions of users. This gamified advertising model drives user engagement while generating substantial ad revenue. “Scratch cards are a win-win, keeping users hooked and brands visible,” an industry insider told The Economic Times.
Beyond payments, these platforms have evolved into fintech ecosystems, offering services like GST filing, invoice creation, and small loans. PhonePe’s UPI Circle, launched in April 2025, allows primary users to authorise payments for others, enhancing accessibility. These value-added services, including mobile recharges and bill payments, attract platform fees of 0.5% to 1% plus GST for card-based transactions, aligning with Paytm’s model. Google Pay’s website confirms that UPI-linked bank transactions remain free, but card payments for utilities like electricity incur fees.
The Indian government’s 2020 decision to waive Merchant Discount Rates (MDR) for transactions below ₹2,000, costing fintech firms ₹12,000 crore in FY24, has pushed platforms to diversify revenue. NPCI’s delay of market share caps to December 2026 provides PhonePe (47.8% share) and Google Pay (37%) breathing room to innovate without disrupting their dominance.
As UPI transactions soar —projected to hit one billion daily— these platforms’ creative monetisation strategies underscore their transformation from payment apps to financial powerhouses, setting a global benchmark for fintech innovation.
Comments are closed.